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New Mandatory Requirements for Leasing of Retail Premises effective 1 February 2024



WHAT YOU NEED TO KNOW

 

When does it take effect and who is affected?  The Code of Conduct for Leasing of Retail Premises (Third Edition) becomes effective on 1 February 2024, applicable to both landlords and tenants entering into leases or tenancy agreements for retail premises.  It applies to new leases and renewals alike, whether the retail premises is in a shopping mall, MRT station or industrial building.


The objective of the Code is to provide guidance to landlords and tenants of retails premises during lease negotiations and to ensure the inclusion of specific terms in the leases, fostering a fair and balanced position.

 

What are the key requirements?  The Code acknowledges the mutual interest of landlords and tenants in nurturing a collaborative landlord-tenant ecosystem, aimed at enhancing the vitality and competitiveness of Singapore's retail, food and beverage, and lifestyle sectors.  It emphasises the importance of landlords and tenants engaging in negotiations in good faith, characterised by honesty, fairness, and consideration for each other's legitimate interests.  Moreover, it underscores the adherence to accepted or reasonable commercial standards of fair dealing in fulfilling contractual obligations.


Landlords must ensure that leases or tenancy agreements incorporate the mandatory requirements outlined in the Code.  Alongside general stipulations, landlords must include 11 leasing principles in the agreement.  For instance:


  1. Simplified Rental Formula.  Rental formula must be straightforward and avoiding complexities such as "S$X psf or Y% of gross turnover rent, whichever is higher".

  2. No personal guarantee.  Landlords cannot demand a personal cover-all guarantee from owners.

  3. Legal and third-party costs.  Guidance is provided in the Code for legal and third-party costs.  Such costs should be transparent and does not allow for profiteering.


Landlords must prepare a checklist for tenants, verifying any deviations from leasing principles, if permitted, and obtaining mutual signatures for agreement.



ACTION REQUIRED

 

For Landlord.  It is likely that previous agreement template will need to be updated to comply with the Code requirements.  Failure to do so could prompt tenant complaints, potentially leading to compensation claims or unenforceable clauses, resulting in unintended/unplanned financial losses and administrative burdens.


For Tenants.  It is important for tenants to review the lease or tenancy agreement together with the Code to ensure that the options available to them are included in the lease or tenancy agreement.


 

Our Corporate Transactions team works with landlords and tenants to safeguard their rights.  Our approach prioritises simplicity and focuses on core priorities.

 

Get in touch with us to learn more. We are here to partner with you, offering an unbiased perspective and exploring practical solutions.

 





About Us
Ling Law is a boutique law firm in Singapore specialising in litigation and corporate commercial laws. Our foremost aim is to help you resolve any legal quandaries in a strategic and efficient manner. We prioritise practical and easily digestible publications tailored for busy professionals like yourself, who value concise insights amidst the demanding schedules.

Legal Notice.  The contents of these publications are for general information and may not be comprehensive in scope. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on these publications.

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